Why Archer Aviation's Management of Hawthorne Airport Matters Just as Much as Developing Its Own Aircraft

Right now, Archer Aviation (NYSE: ACHR) is a money-losing start-up. Only the most aggressive investors should even consider owning the stock. But the company is making some important strategic decisions as it looks to take a leading position in the electric vertical take-off and landing (eVTOL) vehicle space. One big move was to gain control of Hawthorne Airport in California. Here's what you need to know.

Electric vertical take-off and landing: Air taxi

The acronym eVTOL is a mouthful, but it makes more sense when you consider what the purpose of these vehicles really is. They are meant to carry small loads, like a package or a couple of people, over short distances. Think of them as air-taxis, quickly flying over the traffic in congested cities. eVTOL's could revolutionize the aerospace industry.

Image source: Getty Images.

It is clearly very important for Archer Aviation to get its aircraft, known as Midnight, approved for commercial use as soon as possible. That said, it isn't the only company working on an eVTOL vehicle. So time really is of the essence. And the company's move to take control of Hawthorne Airport is a big plus on this front. It gives the company a base from which to test Midnight.

The long-term picture for Hawthorne is far more interesting

That's the near-term benefit. The long-term benefit of controlling this airport is probably more important. Hawthorne is centrally located in California near major cities, making it a potential hub for the air taxi service Archer Aviation hopes to launch in the state. That's obviously a positive, but it's not the end of the story.

Other companies are likely to try to set up air taxi services in California, too. Controlling the well-located Hawthorne Airport could make Archer Aviation a vital service provider to the industry, allowing it to collect fees from its competitors. That's an additional revenue stream and one that would give Archer Aviation a solid, recurring income foundation as it looks to expand its own air taxi service into new markets.

The key to Archer Aviation's success is still Midnight

To be fair, controlling Hawthorne Airport probably isn't nearly as attractive if Archer Aviation doesn't get its Midnight aircraft approved for commercial use. So Midnight is still the linchpin to the whole story, and most investors should probably watch from the sidelines until Midnight is approved. However, Hawthorne makes that story much more interesting, and once Midnight is approved, it could be equally important to the company's long-term success.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.